Playbook to Profiting
42's cheatsheet.
A Quick Guide to 42
On 42, markets are intentionally designed to support both traders and speculators. Given so, users can profit through one of two primary paths:
1. Buy Low → Sell High (Trade to Profit)
Participants capture price appreciation as demand increases and the bonding curve shifts upward. As more capital flows into an outcome, the marginal price rises, allowing early entrants to exit profitably without waiting for resolution.
This strategy is primarily driven by timing, future (anticipated) flows and shifts in market sentiments (of the OT) where profitability lies in the right entry-exit setup.
2. Buy the Correct Outcome Token → Hold to Resolution (Convicted Speculation)
By holding the correct Outcome Token through resolution, participants earn a proportional share of the total collateral pool when the market settles. Returns scale with both market size and the degree of mispricing captured at entry.
This path rewards strong conviction, with outsized payoff accruing to those who position early and remain willing to hold through volatility as the market evolves.
Here, being correct, and correct early unlocks the most convex outcomes.
An Important Caveat: Profitability Is Not Binary
One of the most important (and often misunderstood) properties of 42 is the following:
You can be wrong about the final outcome and still be profitable.
This is not an exception or a loophole, but rather a unique feature of 42 following its asset-issuance model, where real-world events are transformed into continuously tradable Outcome Tokens rather than fixed, 'one-shot' bets.
Since 42 is designed as a trading-first market with a resolution-based end state, profitability depends less on perfectly predicting the final winner and more on entry price, supply dynamics, and how liquidity accumulates across outcomes over time.
So how can profit occur even when the outcome is wrong?
A typical scenario unfolds as follows:
You enter an Outcome Token early, at a low marginal price on the bonding curve.
As attention, narrative, or speculation builds, more participants allocate capital to that outcome.
Increasing demand pushes the marginal price higher along the curve.
You exit your position at a price above your entry cost, realizing a profit.
Example: You buy an Outcome Token at $0.10, anticipating increased participation. As speculation builds, the price rises to $0.20. You then sell and realize a 2x return even if the outcome later resolves as incorrect.
Why Timing Can Matter as Much as Accuracy
This behaviour highlights a core principle of Events Futures:
Being early gives you a favorable cost basis.
Being right while early determines the final payout at resolution.
When both align, returns compound through convex settlement. Even when only timing aligns, trading profits remain possible, even if the market ultimately resolves against your initial thesis.
This is precisely what distinguishes 42 from betting-style prediction markets: price paths matter, not just the final outcome.
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